Ask an expert: More money and lower prices?

MSN Money's Anthony Mirhaydari discusses why inflation has remained tame even while the Fed continues to pump cash into the economy.

By MSN Money Partner Jun 4, 2013 12:03PM
Ever since the Federal Reserve has started to implement its expansionary monetary policy, including several rounds of quantitative easing, many people have been waiting for inflation to hit. Yet prices, including for food and gasoline, are declining. What's going on?

In the video below, MSN Money's Anthony Mirhaydari discusses why, even while the Fed continues to pump money into the economy, prices are falling. What might this mean for the economy, and what should investors do in this climate?
According to economists and policy experts, printing money causes inflation -- that is, higher prices of goods, services and eventually wages. And since the 2008 economic and financial crisis, the Fed has pumped trillions of dollars into the  economy -- first by lowering interest rates in 2007 and then through asset purchase programs and other methods.

Arrow Down (© Kyu Oh/Photodisc/Getty Images)Inflation, though, hasn't roared in as many have feared. There haven't even been signs of inflationary pressures. Instead, food, gas and commodity prices are declining.

Mirhaydari explains why this might be happening and which markets are signaling that prices might come down even further. He further delves into the dangers of falling prices on the economy. Finally, Mirhaydari has some investment recommendations.

The discussion about the Fed's policies, prices and the economy continues over at MSN Money's Facebook community.

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Jun 4, 2013 1:38PM
Food and gas prices going down, you got to be kidding. I haven't seen this. Why is everybody telling us this, it is a lie.
Jun 4, 2013 1:32PM
food and gas prices have gone down?????
Jun 4, 2013 2:34PM
Food prices? WTF wrote this article? What planet or altered universe do you hail from? Gas prices might be moving up and down but they are not in a decline. Food is definitely not coming down. A box of cereal is almost $4-$5 a box depending where you live, health insurance is up, auto insurance is up, mortgage insurance is up, clothing prices are up. Go to TJ Maxx or Marshall's and see. A Polo shirt will set you back $30 or more a shirt. Part of a disinformation, re-education camp tactic to dumb down people and trick them into believing all is well. It's NOT!!!!!
Jun 4, 2013 1:50PM
Delusional....  like democrats....  
Jun 4, 2013 1:58PM

First... stated food and gas prices are rising. Gas is $3.89.9 at my Kroger and Ground Hamburger is $3.69/pound.

Second... Bernanke has been putting $85 billion a month in unsubstantiated fake dollars into the markets since 2009. That's more than a half TRILLION now. Add in all that crap credit his banks have written and he has bought, and we are TRILLIONS deep in a stinky mess. Every dollar of it dilutes or weakens the consumer's buying power. So... if our dollar buys less and prices have risen... inflation is not only out of control but there are fewer people working, earning and paying taxes to offset it. The markets are golden and the shareholders in it haven't used those windfalls for good purpose. Like it or not... we either Eat the Rich to balance this or they give it back. Sharpen your knives and forks folks... greedy people do not give in until they are on the spit and can smell their own skin crisping up. Ben Bernanke is the Enemy of the Entire World. WORST criminal EVER.

Gas is still in the $4.00 range.  Beef will be unattainable soon with the drought situation from last year.  Ammo is non existent in the stores.  Hospital costs are going up.  Prices for consumable goods are not going down.  Only in the minds of some leftist progressives that are happy the prices are where they are so we will get away from that dreaded "Carbon Footprint".
Jun 4, 2013 3:14PM
Gas is not coming down in price. Compare this to two years ago price this still up by at least .25Cents. Whom we are are kidding ?
Jun 4, 2013 4:26PM
What is new.  Anthony is wrong again.  It's unfortunate.
Jun 4, 2013 4:03PM
How can these talking heads tell us anything about Markets when they can't even figure out what's real inflation? We have noted day after day, poster after poster the facts about inflation. Clearly the Mainstream Media is clueless, so what else is new.
Jun 4, 2013 2:05PM
Cramer" MArch 4th  
Bubble in safety stocks
These aren't ever going to be crushed, but could certainly stumble.

Cramer: June 4th

Bubble calling is easy but gives no perspective
Yes, prices are high in some areas, but that rarely means what some pundits are warning about. They just want to make a name for themselves -- not to help people.

Jun 5, 2013 10:32AM

The exact problem of attempting to include Food or Energy cost into inflation, is based on volitility..

Whereas by Regions or Seasons, what can a study use for a base....??


John buys gas @ $3.59 p/g........600 miles away; Henry buys gas @ $4.01 p/g.

Which price or factor do you use ??.....A difference of approximately 10%.

This can happen within a State less than 100 miles apart or even greater discounts that do come into play...Sometimes as much as 25%, for various reasons or pricing.?


Mary and/or Sally go to the Grocery store to get Apples or Potatoes...

Mary gets Apples (in apple country) @ 5 for $1....Sally gets hers(elsewhere) for 4 per $1.

A difference of 25% or 20% depending on calculation..?

Sally buys potatoes @ $4.59 per 10 pounds...Mary buys her potatoes 2 months later(in season) @ $2.50 per 10#s....A difference of about 21 cents per pound or $2.09....Go figure.

Then try and figure inflation on all these above prices...?? 

Jun 5, 2013 5:55AM
Unless the Rate of Change formula also measures when a product is the same price, but has reduced quantity and quality from a historical reference point, then it's useless. Meanwhile, The Average American has to deal with the same or lower wages while getting a negative return of Savings after accounting for fees.

The velocity of M1, M2, and MZM has already proven that the FEDS have failed miserably in providing any real relief for most Americans. At the end of the DAY,  stubbornly high New Home and CAR prices are THE real factors. Stubbornly high Used Care prices and record high Rental Prices are the real factors. The effects of continually paying higher prices for a 4 year period for gasoline, is a major factor throughout the economy.

Does the Rate of Change account for the rate of change folks now face when most of today's tech fails far more quickly. Does it account for the huge rise in Repair Costs for fixing equipment that fail far too quickly compared to historical standards? Bottom-line, don't use standards that really don't apply to the Real America.

For those saying prices are still high, that's true. But that doesn't effect how inflation measures are calculated, which is based on the RATE OF CHANGE in prices.

See this chart:

Jun 4, 2013 4:56PM
Those damn food and gas prices keep dropping.  What the heck.  And right after I bought the grocery store and gas station.  What am I going to do?  The prices keep dropping and dropping and dropping.  Everyone get out there and buy some food and gas at bargain prices today.  As Winthrop and Mortimore said in their time of crises - Get back in there and turn those machines back on.  You people don't know how good you have it.  They dropped yesterday and today and will drop tomorrow. 
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